KARNATAKA RARE EARTH AND ANR. versus THE SENIOR GEOLOGIST, DEPARTMENT OF MINES AND GEOLOGY AND ANR.

Citation: [2004] 1 S.C.R. 965 · Decided: 23-01-2004 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Dismissed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

,.,. J 
.--+ 
) . 
KARNATAKA RARE EARTH AND ANR. 
V. 
THE SENIOR GEOLOGIST, DEPARTMENT OF MINES AND 
GEOLOGY AND ANR. 
JANUARY 23, 2004 
[R.C. LAHOTI, ASHOK BHAN AND B.P. SINGH, JJ.] 
Land Laws: 
A 
B 
Mines & Minerals (Development & Regulation) Act, 19)7; Section 211 C 
Karnataka Minor Mineral Concession Rules, 1969; Rule 3A: Grant of lease 
to quany granites-Challenge to--Grant of lease quashed by High Court-
Writ appeal dismissed-On Appeal, Supreme Court passed interim orders 
directing renewal of lease and to release transport permits-Lessees operated 
quarries and exported granite blocks even after the dismissal of the appeals- D 
State demanding price of granite exported-Challenge to--Dismissed by High 
Court-On appeal, Held: Provisions as to recovery of price could be construed 
as recovery of compensation and not penalty-On dismissal of appeals, 
extraction/disposal of mineral was without lawful authority-Lessees could 
not relain benefits earned by them in terms of inlerim orders of Supreme 
Court-State Government empowered in terms of Section 2 I of the Act to E 
order recovery of price in respect of mineral extracted by the lesse.es without 
any lawfiil authority-Constitution of India, Article I 42. 
Interpretation of Statutes: 
,?-
Section 21-Marginal note/Title-Penalties-Implication of-Held: It F 
cannot be pressed into service to give such colour to the meaning of the 
provisions of law which ii cannot have in /aw-Construing so, recovery of 
price of•nineral by the State is compensalion in lieu of loss of mineral extracted 
by the Lessees without authority of law and not a penalty. 
Appellant-lessees were holding two quarry leases in Government 
'"'· 
land. Grant of 203 such leases in Government land had been challenged 
and Single Judge of the High Court upheld the challenge and it was 
affirmed by the Division Bench of the High Court. The lessees 
unsuccessfully approached this Court. IAlankar Grani/es and Ors. v. PGR 
G 
965 
H 
966 
SUPREME COURT REPORTS 
[2004] I S.C.R. 
A Scindia, MLA and Ors., 1199617 SCC 4161 However, by its earlier interim 
orders, this Court directed that the renewals/grants in favour of the 
appellant-lessee would continue and also granted them transport permit. 
Appellants operated the quarries, transported blocks of granites/mim~ral 
and also exported the same to foreign countries even after dismissal of 
the appeals. State Government issued orders demanding price of the 
B granite blocks so exported. Aggrieved, lessees challenged the order by way 
of Writ Petitions which were dismissed by the High Court. Hence the 
present appeals. 
It was contended for the appellant-lessees that since the appellant 
C had extracted and exported the granite blocks after payment of royalty 
and as per the said interim orders, they acted lawfully and bonajidely; that 
the mining lease was valid in terms of the interim orders of Supreme 
Court; and that the demand for price of grant of blocks by the State 
Government was in the nature of penalty. 
D 
Dismissing the appeals, the Court 
HELD: I.I. The demand by the State of Karnataka of the pric1: of 
the mineral cannot be said to be levy of penalty or a penal action. Section 
21 of the Mines & Minerals (Development and Regulations) Act, 1957 d1:als 
E with a variety of situations. The provision as to recovery of price is in the 
nature of recovering the compensation and not penalty; so also the power 
of the State Government to recover rent, royalty or tax in respect of 11ny 
mineral raised without any lawful authority can also not be called a penal 
action. The underlying principle of sub-section (S) of Section 21 is tha1t a 
person acting without any lawful authority must not find himself pla1:ed 
F in a position more advantageous than a person raising minerals with lawful 
authority. (971-D F; Gf 
G 
South Eastern Coalfields Ltd. v. State of MP. and Ors., (2003( 8 S4CC 
648, relied on. 
1.2. It is true that by the interim orders passed by this Court the 
appellants were allowed during the pendency of the earlier appeals to 
operate under the mining leases, whether freshly granted or renewed and 
to effectuate the interim orders the authorities were also directed to issue 
transport permits. The plea of the appellants that the dismissal of the 
H appeals was not in their knowledge cannot be accepted inasmuch as the 
.Al· 
r-
' ' 
KARNATAKA RARE EARW 1•. SNR. GEOLOGIST. DEPT. OF MINES AND GEOLOGY 
967 
' .J. ' 
judgments must have been pronou

Excerpt shown. Read the full judgment & AI analysis in Lexace.